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Kuwait to issue tenders for $14bn Zour project

Kuwait, April 13, 2014

Kuwait will issue the three main construction tenders for its new 615,000-barrels-per-day (bpd) oil refinery next month and expects to sign contracts by early next year at the latest, a state oil company official said on Sunday.

Al Zour refinery, estimated to cost 4 billion Kuwaiti dinars ($14.2 billion), will make oil products such as diesel, kerosene and naphtha for export and low-sulphur fuel oil for domestic power stations.

The refinery, which will become the biggest in the Middle East, will begin operations by late 2018 or early 2019.

The project is part of the Opec oil producer's 30 billion dinar development plan, announced in 2010. Such mega projects are a test for Kuwait, which has struggled to upgrade its infrastructure and attract foreign investors, partly due to political instability and bureaucracy.

"Three mega tenders are going to come in May," Khaled Al-Awadhi, manager of the new refinery project at Kuwait National Petroleum Company, told reporters.

The tenders will be for the main process units, secondary process units and a utilities and offsite package, he said. KNPC will choose the winning bids by the end of this year and expects to sign contracts by the first quarter of 2015.

Kuwait will export around 340,000 million bpd of oil products from the refinery, mainly to Europe and Asia while 225,000 bpd of fuel oil will be used in local power stations, Awadhi said.

KNPC signed a 186 million dinar contract with Dutch contacting company Van Oord two weeks ago to prepare land for construction, he said, while on Sunday KNPC also opened two smaller tenders for marine work and tankage.

The Zour project will increase Kuwait's total refinery capacity to 1.45 million bpd and allow it to shut down its oldest refinery, Shuaiba which processes around 200,000 bpd.

Awadhi was speaking at a signing ceremony for Kuwait's clean fuel project, another major element of the development plan. KNPC signed contracts with three consortia led by Japan's JGC Corp, Britain's Petrofac and U.S.-based Fluor Corp. Details of the contracts, worth $12 billion in total, were announced in February.

The total cost of the clean fuels project will be close to this sum and less than the 4.6 billion dinars previously budgeted, KNPC officials said. - Reuters